Fracking Is America's (Not So) Secret Weapon

Authored by Jim Welty, Rob Burndrett & Charlie Burd via RealClearEnergy,

America’s shale revolution and ascension to the world’s largest oil and natural gas producer has made one fact abundantly clear: energy security is national security. No longer are geopolitical and national security decisions held hostage to the threat of energy price spikes. Because of oil from Texas and natural gas from Appalachia, Americans aren’t facing the energy supply shocks that were once guaranteed to follow rising Middle East tensions.

Home to the nation’s largest natural gas field with the Marcellus and Utica shales, Pennsylvania, Ohio, and West Virginia produce a third of America’s natural gas. That’s energy that keeps the lights on in our homes, the heat flowing in the winter, and power steady and reliable for factories, hospitals, military bases, and critical infrastructure across America. But it does much more. Appalachian natural gas is a big part of what makes America strong, self-reliant, and free.

Throughout history, energy security has meant physical security. When we have the energy we need, produced right here at home, we reduce our dependence on unstable or hostile nations. We insulate ourselves from supply disruptions and price shocks triggered by global conflicts. And we make sure that in times of crisis, from natural disasters to national emergencies, we have the fuel to respond, rebuild, and defend.

Our abundant, reliable natural gas underpins the strength of our Armed Forces and the resilience of our economy. Employing millions of our own people, energy powers the manufacturing of steel, ammunition, vehicles, and the technologies that support our troops. It safeguards critical operations from cyber and physical threats by ensuring reliable, secure power supplies.

And as artificial intelligence rapidly transforms industries, it’s natural gas that remains the only fuel fully capable of meeting the intense, always-on energy requirements these technologies depend on.

In short, energy security protects American lives and the American way of life.

But here’s the challenge: While we produce more than enough clean-burning, affordable natural gas to meet our needs and support allies overseas, we can’t move enough of it to where it’s needed most. And electrical grid operators face mounting strain as power-hungry technologies accelerate demand.

The missing links? Pipelines and new gas-fired generation. Without more infrastructure to safely and efficiently transport and use domestic energy, we leave ourselves exposed to higher costs, supply vulnerabilities, and reliance on foreign adversaries.

New England is perhaps the most staggering example of energy insecurity here at home, sitting just a few hours drive from the largest gas producing region in the country, yet forced to rely on expensive, unreliable foreign fuel because politics have clouded smart energy policies for decades. Now, those same political leaders are quietly backing down and conceding what we’ve known all along: pipelines from Appalachia are key to their energy security.

Meanwhile, our country’s global competitors and adversaries aren’t waiting. Russia and China – they understand the power of energy in projecting strength and influence. America must do the same, led by the innovators in Appalachia who drove the shale revolution just over 20 years ago.

Now is the time for action. Washington is working to cut the red tape that’s stalled progress, but it’s up to us in the states to unleash the full potential of Appalachian energy. Thank you to those elected leaders who are already leading the charge, but we need all of our policy officials to champion building the natural gas infrastructure that will secure affordable energy for families, strengthen our physical and economic security, and help ensure that America remains the most powerful, resilient, and free nation on the planet.

Let Appalachia’s natural gas power our future and protect the freedoms we hold dear.

Jim Welty, Rob Brundrett, and Charlie Burd lead Appalachia’s top natural gas trade associations, the Marcellus Shale Coalition, the Ohio Oil and Gas Association, and the Gas and Oil Association of West Virginia, respectively.

Tyler Durden Thu, 07/03/2025 - 14:30

After '8 Hours Of Hogwash' From Rep. Jeffries, House Republicans Pass Trump's 'Big Beautiful Bill'

Update (1430ET): The republican response to Democratic leader Hakeem Jeffries' record-breaking address was brief and to the point, as Rep Jason Smith retorted:

"I come from the Show-Me State, and what we just heard can be defined in one word. A bunch of hogwash is what we've heard for eight hours on that side of the building."

.@RepJasonSmith: "I come from the Show-Me State, and what we just heard can be defined in one word. A bunch of hogwash is what we've heard for eight hours on that side of the building." pic.twitter.com/VdPfufshSF

— Conservative War Machine (@WarMachineRR) July 3, 2025

House Speaker Mike Johnson spoke next, noting that “we have a big job to finish."

 “With one big beautiful bill we are going to make this country stronger, safer and more prosperous than ever before.”

And then came the vote... and (218-214) Republican House members passed the bill with all Democrats voting 'nay'...

The bill will now go President Trump's desk for to signed tomorrow morning.

Happy 4th 'Murica!

*  *  *

Overnight, most of the Republican holdouts on the 'Big Beautiful Bill' relented, flipping their support to advance the legislation to a final vote on the House floor after several deals were cut with President Trump. Earlier in the morning, Speaker Mike Johnson (R-LA) kept the procedural vote open for almost six hours - which once passed would kick off debate before final passage. 

House Minority Leader Hakeem Jeffries (D-NY), however, decided to throw a massive tantrum that's been going on for more than five hours in what's known as the "magic minute," a privilege for party leaders in the chamber that allows them to speak for as long as they want. According to Fox News, Jeffries was seen arriving with multiple binders - one of which he read from for around three hours. If the rest of the binders also contain portions of his speech, we could be waiting for a while.

Tempt us with a good time?

Hakeem Jeffries is warning that a "deportation machine will be unleashed on steroids" if Trump's Big, Beautiful Bill passes. pic.twitter.com/MDqbCNg2xV

— Trending Politics (@tpbreaking) July 3, 2025

If Jeffries speaks until at least 1:26 p.m. he'll break the record for the longest floor speech held by former House Speaker Kevin McCarthy, who spoke for 8 hours and 32 minutes, according to Punchbowl News' Jake Sherman.

The move comes after the House burned the midnight oil to advance the $3.3 trillion 'Big Beautiful Bill' to its final phase in Congress.

The GOP holdouts were convinced to flip after President Trump promised them that he would use his executive powers to vigorously enforce certain provisions for green energy tax credits.

Rep. Thomas Massie (R-Ky.) was a one-man rollercoaster for the GOP leadership. Massie railed against the bill all week. He initially voted for the rule. But then at 11:30 p.m., Massie entered a mostly empty House chamber and switched his vote from yes to no.

However, Massie – who Trump has personally targeted for defeat in 2026 – switched again back to yes when all the hardliners flipped. The GOP leadership hopes that Massie will vote for final passage later this morning. And he has made clear that he would like Trump to stop attacking him. -Punchbowl

"He did a masterful job of laying out how we could improve it, how he could use his chief executive office, use things to make the bill better," Rep. Ralph Norman of South Carolina told CNBC. 

This comes after multiple Republicans were seen in the West Wing on Wednesday to cut deals as Trump pressed them into voting yes on the bill. 

Norman said he would be a 'nay' on the Senate-passed version of the bill, only to flip and support it after his meeting with Trump - who promised to use his office to stringently enforce energy tax credit phase-outs.

"President Trump is going to use his powers to — like on the subsidies, to make sure that it’s a lot of these subsidies won’t remain in effect, you know, from here on out," said Norman. 

Trump, meanwhile, says he plans to sign his signature tax and spending bill tomorrow morning at a White House ceremony, Punchbowl's Sherman posted on X.

NEW -- I am now told that this signing ceremony will be at 5 p.m. tomorrow.

Seems like it's a moving target https://t.co/JJu017sA6w

— Jake Sherman (@JakeSherman) July 3, 2025

In response to the GOP's advancing the bill, Trump said on Truth Social that it was a "great night." 

"What a great night it was. One of the most consequential Bills ever," he wrote, adding "The USA is the ‘HOTTEST’ Country in the World, by far!!!"

The core of the BBB permanently extends and expands the 2017 Trump tax cuts, introducing new deductions for tip income and overtime pay, while providing significant tax relief for Social Security recipients.

It reinstates full and immediate expensing for business equipment and R&D, delivers new construction write-offs for manufacturers, and boosts incentives for domestic semiconductor production. High-income Americans and owners of pass-through entities also stand to benefit from expanded deductions, and the bill raises the state and local tax deduction cap for upper-middle-class households. But these tax changes are offset by historic spending cuts—chiefly, nearly $1 trillion in reductions to Medicaid and SNAP.

The legislation also scales back Affordable Care Act subsidies and imposes stricter eligibility checks, drawing ire from hospitals and health advocates. Meanwhile, clean energy and EV sectors face deep setbacks as tax credits are repealed and renewable subsidies curtailed. 

Stay tuned... and maybe buy a hat or our personal favorite Anza knife?

Tyler Durden Thu, 07/03/2025 - 14:30

(Posted with permission). The ISM® Services index was at 50.8%, up from 49.9% last month. The employment index decreased to 47.2%, from 50.7%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 50.8% June 2025 Services ISM® Report On Business®

Economic activity in the services sector grew in June after just one month of contraction, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® indicated expansion at 50.8 percent, above the 50-percent breakeven point for 11th time in the last 12 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In June, the Services PMI® registered 50.8 percent, 0.9 percentage point higher than the May figure of 49.9 percent. The Business Activity Index returned to expansion territory in June, registering 54.2 percent, 4.2 percentage points higher than the ‘unchanged’ reading of 50 percent recorded in May. This index has not been in contraction territory since May 2020. The New Orders Index returned to expansion territory in June, recording a reading of 51.3 percent, an increase of 4.9 percentage points from the May figure of 46.4 percent. The Employment Index returned to contraction territory for the third time in the last four months; the reading of 47.2 percent is 3.5 percentage points lower than the 50.7 percent recorded in May.

“The Supplier Deliveries Index registered 50.3 percent, 2.2 percentage points lower than the 52.5 percent recorded in May. This is the seventh consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 67.5 percent in June, a 1.2-percentage point decrease from May’s reading of 68.7 percent. The index has exceeded 60 percent for seven straight months, with the May and June readings the highest since November 2022 (69.4 percent).
emphasis added

This was at consensus expectations, but employment was weak and prices paid very high.

Deputy Head Of Russian Navy Killed In Ukraine Missile Strike

In a rare battlefield development, a very high-ranking general officer for Russia's military has been killed by Ukrainian forces, and it actually happened on Russian soil.

Major General Mikhail Gudkov, deputy commander of the Russian Navy and a brigade leader in the Ukraine war, has been confirmed dead in Russia’s Kursk region, according to a statement Thursday by a Kremlin official.

via Reuters

The news broke when Russian and Ukrainian military Telegram channels reported that Gudkov was killed along with 10 other soldiers in a Ukrainian strike targeting a command post in Korenevo, which lies near the Ukrainian border.

Gudkov is among the highest-ranking Russian military figures killed by Ukrainian forces since the conflict began. A slew of international headlines are reporting his death on Thursday.

Reuters reports the following, citing a Russian regional governor:

Kozhemyako, who said he had spoken to Gudkov a lot over the years, said in a statement that Gudkov had been killed "carrying out his duty as an officer" along with others, and expressed his condolences to the dead men's relatives.

"When he became Deputy Chief of the Navy, he did not stop personally visiting the positions of our marines," Kozhemyako said on Telegram.

The 42-year old general had only been promoted by President Putin to the number two command spot over the Navy in late March, according to the Institute for the Study of War think tank.

According to more emerging details in regional media, "An obituary posted by a Russian Navy servicemen’s organization states that on July 2, 2025, the Ukrainian Armed Forces launched a missile strike on the command post of the 155th Marine Brigade."

Russian navy leader Mikhail Gudkov confirmed killed in Ukraine missile strike https://t.co/ms9bgcZs3B pic.twitter.com/mCjDI6CN5n

— New York Post (@nypost) July 3, 2025

Further, "The post said four missiles hit a forward command post in Korenovo, killing more than 10 people, including Gudkov and several senior officers."

Were Western-supplied systems use in the attack? The possibility that Ukraine may have used US or NATO-sourced missiles to kill a top navy officer in an attack on Russian soil would mark another massive escalation.

Tyler Durden Thu, 07/03/2025 - 14:00

Four Reasons Why This 4th Of July Is Better

Authored by Larry Behrens via RealClearEnergy,

As Americans fire up their grills and head out on road trips, there’s something to celebrate this Independence Day: energy sanity is making a comeback.

This year, there’s a little more freedom on the menu. After years of being shackled by a radical green agenda, 2025 is shaping up to be the year we finally hit the brakes and throw it in reverse.

Here are four reasons why this 4th of July is better than the last:

1. Gas prices are over 31 cents cheaper

According to AAA, the national average for gasoline is more than 31 cents cheaper per gallon than it was last year at this time. That may not sound like much—until you fill up your tank and realize that’s nearly $5 per fill up in a 15-gallon tank. Better yet, gas is now a whopping $1.83 cheaper per gallon than the record highs we saw under Joe Biden just three years ago. 

That’s not an accident. It’s the result of prioritizing American energy, not punishing it.

2. You don’t live in California or Washington

While much of America is seeing relief at the pump, California and Washington are doubling down on failure.

In California, gas prices—already the highest in the nation—are about to skyrocket by 65 cents a gallon thanks to regulations and a state gas tax hike. 

Meanwhile, in Washington, gas prices have actually gone up 10 cents from last year, bucking the national trend. And on July 1st, the state is tacking on a new 6-cent-per-gallon gas tax, because nothing says “happy Independence Day” like making driving unaffordable. 

If you’re not in those states, breathe a sigh of relief—and maybe send a thank-you card to your local leaders who haven’t lost their minds.

3. The war against our appliances is over

This Independence Day, go ahead and crank the air conditioner and fire up that gas grill—because the federal assault on your home appliances is over.

The Biden administration’s war on dishwashers, water heaters, stoves, and ceiling fans has been halted. The savings are real as the cost of replacing everything Joe Biden wanted you to replace in your house was near $10,000 per home. And that’s even before you buy that electric vehicle! This year, the senseless effort to force every American into higher costs and worse performance has officially been scrapped. 

Be sure to celebrate by using your appliances freely—without guilt, government overreach, or green lecturing.

4. The Big Beautiful Bill beats back the Green New Scam

Remember the so-called Inflation Reduction Act? It turned out to be a massive slush fund for green special interests and Chinese supply chains. But now, the Big Beautiful Bill is finally pulling the plug.

Washington, D.C. is proposing to phase out wasteful green energy tax credits, and even better—impose a new tax on wind and solar projects that rely on Chinese components.  If your so-called clean energy plan depends on slave labor and subsidies, maybe it’s not that clean after all.

Last year, Americans were told to accept high prices, appliance mandates, and dependence on China—all in the name of a green fantasy. This year, we’re turning the page.

Gas is cheaper. Appliance tyranny is dead. Green grift is getting taxed. And a little common sense is finally clawing its way back into Washington, D.C.

So, this 4th of July, as you hit the road, flip the burgers, and crank the AC, remember this: we’re proudly celebrating America’s independence— but we’re also reclaiming our own.

From gas tanks to grill flames, freedom is back—and it runs on American energy.

Larry Behrens is an energy expert and the Communications Director for Power The Future. He has appeared on Fox News, ZeroHedge, and NewsMax speaking in defense of American energy workers. You can follow him on X/Twitter @larrybehrens

Tyler Durden Thu, 07/03/2025 - 13:30

CIA Memo: Obama Team 'Excessively Involved' In Fueling Trump-Russia Narrative

Authored by Luis Cornelio via Headline USA,

A newly declassified CIA memo revealed that top officials within the Obama administration deliberately manipulated intelligence to exaggerate Russia’s purported 2016 election interference. This set the stage for the years‑long Trump‑Russia collusion probe. 

The review, commissioned by CIA Director John Ratcliffe in May 2025, reassessed the 2016 Intelligence Community Assessment on Russian interference.

It found then‑CIA Director John Brennan, FBI Director James Comey and DNI James Clapper were “excessively involved” in framing the initial Russia narrative. 

All the world can now see the truth: Brennan, Clapper and Comey manipulated intelligence and silenced career professionals — all to get Trump. Thank you to the career @CIA officers who conducted this review and exposed the facts. https://t.co/S7Mxz6xA6P

— CIA Director John Ratcliffe (@CIADirector) July 2, 2025

On Dec. 6, 2016—just weeks after President Donald Trump’s election—then-outgoing President Barack Obama ordered the probe, concluding Vladimir Putin “aspired” to sway the vote. 

However, according to the declassified 2025 review, Brennan, Comey and Clapper rushed the 2016 assessment in a “chaotic,” “atypical” and “markedly unconventional” fashion, raising questions about a “potential political motive.” 

The review found intelligence officials felt “jammed” by the rushed timeline, with many seeing the draft report for the first time at the sole in-person review on December 19.

One CIA author called it “unusual” that so few changes were made to such a lengthy and high-profile assessment. 

This rushed assessment ultimately cast doubt on Trump’s legitimacy and opened the door to the Mueller investigation, partisan congressional hearings, and countless media leaks. 

“All the world can now see the truth: Brennan, Clapper and Comey manipulated intelligence and silenced career professionals — all to get Trump,” Ratcliffe said, thanking CIA officers who conducted the review.

New York Post columnist Miranda Devine broke the story on Wednesday, revealing the review’s damning conclusions. 

The review confirms what was already widely known in conservative and Republican circles: Brennan, Comey and Clapper were the political architects of the Trump-Russia hoax. 

Tyler Durden Thu, 07/03/2025 - 12:40

"Your 'Equity' Is Fake" - Robinhood Faces Backlash After OpenAI Denounces Tokenized Shares

Authored by Kathleen Kinder via CoinLaw.io,

OpenAI has publicly rejected Robinhood’s new “OpenAI tokens,” clarifying they do not represent actual equity in the company.

Key Takeaways

1. OpenAI disavowed Robinhood’s tokenized equity products, stating they do not grant real ownership in OpenAI.

2. The tokens offer indirect exposure through a Special Purpose Vehicle, not direct shares.

3. Elon Musk and others have criticized Robinhood’s efforts as misleading.

4. The move highlights growing tensions between crypto innovation and traditional private equity rules.

In a clash that is drawing widespread attention across finance and tech circles, OpenAI has forcefully rejected Robinhood’s latest effort to sell “OpenAI tokens” to retail investors. The controversy erupted after Robinhood announced it would distribute these tokens to European Union users, promoting them as a way for everyday people to gain exposure to private company equity using blockchain technology. While Robinhood framed the move as a step toward democratizing finance, OpenAI and key industry voices have condemned the tokens as misleading and lacking in substance.

OpenAI’s Public Statement: No Equity, No Endorsement

OpenAI, the well-known artificial intelligence company, issued a rare public statement from its official newsroom account, clearly distancing itself from Robinhood’s offering.
“These ‘OpenAI tokens’ are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer. Please be careful,” the company wrote on X.

These “OpenAI tokens” are not OpenAI equity. We did not partner with Robinhood, were not involved in this, and do not endorse it. Any transfer of OpenAI equity requires our approval—we did not approve any transfer.

Please be careful.

— OpenAI Newsroom (@OpenAINewsroom) July 2, 2025

OpenAI’s response was triggered by Robinhood’s announcement earlier in the week, in which the fintech platform rolled out tokenized shares of OpenAI, SpaceX, and other major private firms. These digital assets were distributed to select users in the EU as part of a promotional giveaway.

Robinhood’s Defense: Democratizing Private Assets

Robinhood’s leadership responded by defending the program, emphasizing that the tokens are designed to give retail investors indirect access to previously exclusive markets. A spokesperson for Robinhood clarified, “These tokens give retail investors indirect exposure to private markets, opening up access, and are enabled by Robinhood’s ownership stake in a special purpose vehicle.”

Robinhood CEO Vlad Tenev echoed this sentiment, stating, “While it is true that they are not technically ‘equity,’ the tokens effectively give retail investors exposure to these private assets. Our giveaway plants a seed for something much bigger, and since our announcement we have been hearing from many private companies that are eager to join us in the tokenization revolution.”

The company rolled out the tokens as part of a broader effort to introduce tokenized stocks and real-world asset trading for European customers, building on a newly launched layer two blockchain network for settling tokenized equity trades.

What Are Investors Actually Buying?

Despite Robinhood’s promotional messaging, the underlying structure of the tokens is complex and layered.

• Investors are not purchasing actual shares of OpenAI or direct stakes in the company.

• The tokens represent contracts linked to Robinhood’s ownership interest in an SPV, which itself holds shares of private companies.

• This means buyers are two steps removed from actual equity, and the value of the tokens may diverge significantly from the true value of the underlying shares.

• According to Robinhood’s help center, users buying these tokens are acquiring “tokenized contracts that follow the price” of the underlying assets, recorded on blockchain.

Industry Pushback and Criticism

The move by Robinhood has attracted strong criticism, both from within the industry and from high-profile figures.

• Elon Musk, co-founder of OpenAI and SpaceX, took to X to call the equity claims “fake,” highlighting his broader concerns about OpenAI’s shift toward a for-profit model.

Your “equity” is fake

— Elon Musk (@elonmusk) July 2, 2025

• Industry analysts note that private companies typically guard their cap tables and limit share sales to selected investors, making Robinhood’s approach unusual and controversial.

• In similar instances, other startups like Figure AI have sent cease-and-desist letters to brokers marketing unauthorized share sales, underlining how sensitive private companies are about third parties trading or referencing their equity.

Broader Context: Tokenization and Financial Inclusion

Robinhood’s foray into tokenized private equity reflects a larger trend in finance, where crypto exchanges and platforms seek to offer access to previously inaccessible asset classes such as private equity, private credit, and commercial real estate.

• Traditionally, these assets are reserved for accredited investors with significant wealth or credentials, limiting opportunities for the average retail customer.
• Robinhood argues that tokenization and asset fractionalization can help break down these barriers, though critics warn that regulatory and ethical questions remain unresolved.

CoinLaw’s Takeaway

This episode is a clear signal of the growing friction between fast-moving crypto innovation and the strict, carefully controlled world of private company finance. While Robinhood presents tokenization as a breakthrough for retail investors, OpenAI’s sharp rebuke makes it clear that not all stakeholders see it that way. Investors should scrutinize exactly what is being offered and recognize that buying a token does not always mean owning a share in the world’s biggest private companies.

Tyler Durden Thu, 07/03/2025 - 12:00

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $71.5 billion in May, up $11.3 billion from $60.3 billion in April, revised.

May exports were $279.0 billion, $11.6 billion less than April exports. May imports were $350.5 billion, $0.3 billion less than April imports.
emphasis added

Click on graph for larger image.

Exports and imports decreased in May.

Exports were up 5.3% year-over-year; imports were up 3.3% year-over-year.
Imports increased sharply earlier this year as importers rushed to beat tariffs.  

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China decreased to $13.9 billion from $23.7 billion a year ago.

Democrat Civil War Intensifies As Obamaworld Opposes Mamdani

The Democrat Party is grappling with internal divisions following Democratic Socialist Zohran Mamdani’s upset victory in New York City’s Democrat mayoral primary election this week. Mamdani, a 33-year-old New York State Assembly member, decisively defeated disgraced former New York Gov. Andrew Cuomo with 56% to 44% in the final ranked-choice voting results.

Two prominent Obama-era officials, former Treasury Secretary Jack Lew and former Office of Management and Budget Director Peter Orszag, have publicly opposed Mamdani’s candidacy, warning that his progressive economic policies could harm New York City.

Jack Lew

In a CNBC interview on Wednesday, Lew expressed deep concern about Mamdani’s platform. “The policies that he outlines are not policies that would be good for New York,” Lew said. “I worry deeply, having spent most of my life in New York, about a city I call home.” He further cautioned against populist-driven policies from both political extremes, stating, “I see a similarity between policies solutions to the left and the right that satisfy populist sentiment, don’t always go through the filter of ‘do they work? I don’t think they work. I think that’s a problem,” Lew added.

Orszag, now Chairman and CEO of Lazard, shared similar apprehensions in a separate CNBC interview last week, describing Mamdani’s victory as indicative of troubling trends within the Democratic Party. “Let me step back and just say that I am saddened to say that I think the Democratic Party is becoming increasingly antisemitic and anti-capitalism,” Orszag said. “And the thing about it is turning … towards socialism and turning away from your moral principles through antisemitism never works. So there is a fundamental concern that I have and I think many people have about the direction of the Democratic Party along those two dimensions.”

Orszag pointed to specific examples, noting, “The Democratic candidate for mayor has embraced the ‘global intifada’ idea.” He also criticized the Democratic Congressional Campaign Committee for distributing fundraising emails from a senior operative who suggested Jewish donors are primarily motivated by tax cuts.

Peter Orszag

“I am hopeful that the Democratic Party will change course and, again, history shows that neither being anti-capitalism nor being antisemitic is the pathway to any sort of good outcome,” Orszag added.

Mamdani’s win is just one example of growing tensions within the Democrat Party. Similar concerns about the party’s direction have surfaced elsewhere. In June, David Hogg, the 25-year-old Parkland shooting survivor and gun control activist, resigned as vice chair of the Democrat National Committee (DNC) amid internal turmoil. Hogg faced backlash for his controversial plan to intervene in primary races against incumbent Democrats, which many viewed as divisive and a breach of DNC neutrality.

After the DNC called for a new election for his position citing procedural issues, Hogg chose not to run again. In his departure, he sharply criticized the party, calling its leadership a “government of old people” fixated on “attention and reputation” rather than addressing critical issues like the economy.

Meanwhile, Randi Weingarten - longtime head of the 1.8 million-member American Federation of Teachers have also quit the DNC. 

Sen. Elissa Slotkin (D-MI) has also voiced frustration with the party’s lack of cohesion during a speech at the Center for American Progress on Thursday. “We’re like a solar system with no sun ... We don’t act as a team, and when we don’t work as a team, we turn our guns on each other, and it’s so, so, so, fruitless,” she said.

Slotkin emphasized the need for unified leadership, saying, “They are the leaders of the House and Senate. I work with them every single day. I push on them every day, especially in the Senate. I think they would attest to that. And we need to work as a team, and we need wartime generals who are gonna get us there because of what’s going on in the country.”

The lawmaker also acknowledged internal and grassroots pressure for change but offered no specific solutions, noting, “I have no big announcement to make. I would just say the pressure is there from inside the caucus, but also from the grassroots.”

Tyler Durden Thu, 07/03/2025 - 11:30

The DOL reported:

In the week ending June 28, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 236,000 to 237,000. The 4-week moving average was 241,500, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 245,000 to 245,250.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 241,500.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

Supreme Court To Hear Challenges To State Laws Keeping Males Out Of Female Sports

Authored by Matthew Vadum via The Epoch Times,

The Supreme Court agreed on July 3 to consider whether states can ban male athletes who don’t identify with their sex from competing on school sports teams intended for females.

The decisions to grant the petitions for certiorari, or review, in two separate cases were published on a list of orders.

No justices dissented.

The court did not explain the decisions.

The first case, Little v. Hecox, is about Idaho’s Fairness in Women’s Sports Act, “which ensures that women and girls do not have to compete against men and boys no matter how those men and boys identify,” according to the petition filed in the case.

The second case, West Virginia v. B.P.J., is about a similar law in West Virginia.

State lawmakers voted to keep the sexes separate in sports because of the “inherent physical differences between biological males and biological females,” according to the petition filed in the case.

The two cases are expected to be argued separately.

The Supreme Court is expected to hold oral arguments for the cases in its new term that begins in October.

Tyler Durden Thu, 07/03/2025 - 11:10

Goldman Finds 'Net Purchase Intent' For Tesla Begins Recovery 

Wednesday marked delivery report day for Tesla and Rivian, as both electric vehicle makers posted figures reflecting ongoing pressure from waning demand and intensifying competition. Offering fresh insight and key takeaways to help assess the EV market is a new note from Goldman Sachs analysts led by Mark Delaney.

Tesla reported 2Q25 deliveries of 384k vehicles, up 14% quarter-over-quarter but down 13% year-over-year. Production totaled 410k, flat versus the previous year. The Model 3/Y made up most of the deliveries at 374k (+15% QoQ, -12% YoY), while other models (S/X/Cybertruck) fell to 10k (-19% QoQ, -52% YoY). Lease penetration fell 2%, from 4% in the first quarter of the year. 

Deliveries missed Visible Alpha Consensus Data of 394k, but beat Goldman's forecast of 365k. Delivery boosts came from the U.S., Europe, and other markets, while China volumes were mainly in line with expectations.  

Regionally, YoY sales declined:

• U.S.: down mid-teens

• Europe: down 30%

• China: down mid-single digits

The declines across the U.S. and Europe were primarily attributed to deteriorating consumer sentiment, driven by an information war waged by far-left NGOs, progressive lawmakers, and left-leaning corporate media against Elon Musk's gov't efforts—such as running DOGE—to expose corruption and fraud within the bloated U.S. government. In China, competition from BYD and other EV makers played a much larger role in softening sales. 

The analysts provided HundredX's net purchase intent scores for Tesla that began to slide when Musk began ramping up DOGE operations earlier this year. With Musk's exit from DOGE, there appears to be a meaningful NPI rebound; the shape of the recovery is not yet determined. 

Delaney listed five key Tesla items for clients to focus on:

1) Outlook for vehicle deliveries

We think that one debate in the market from here will be on the trajectory of Tesla's vehicle deliveries. We believe one key factor to monitor will be the launch of Tesla's new model(s) including the timing of these launches, and the degree that the features/costs of new models are differentiated enough vs. what Tesla currently provides to drive material growth. Tesla had been aiming to launch a new lower cost model in 1H25 per comments on its 1Q earnings call, but so far this has not occurred to our knowledge. While we expect new model(s) to help with growth, Tesla's management team noted that using its existing production lines would limit how differentiated new models may be in terms of form factor (and media reports have described the lower cost model as a variant of the Model Y). In terms of headwinds, IRA consumer EV credits could be eliminated later this year under the current 'OBBB' that passed the U.S. Senate, Tesla is facing significant EV competition in China, and Tesla's consumer brand scores per surveys (HundredX and Morning Consult) have deteriorated in North America and Europe.

We also expect investors to question whether a degree of the 2Q upside was pull-in ahead of the potential end to IRA EV consumer credits.

Given the better 2Q delivery results, we raise our 2025 delivery forecast to 1.594 mn (down 11% yoy) from 1.575 mn (down 12% yoy) prior. Our 2026/2027 estimates are unchanged at 1.865 mn/2.150 mn. Our estimates for 2025/2026/2026 are below Visible Alpha consensus at 1.647 mn/1.995 mn/2.259 mn.

2) Automotive margins

We expect Tesla's automotive non-GAAP gross margin excluding regulatory credits to remain a key focus for investors, and we are now modeling the automotive non-GAAP gross margin to be 12.7% in 2Q, compared to our prior estimate of 12.5% and up from 12.5% in 1Q25, with the increase driven by higher volumes. However, we expect pricing and to a lesser extent tariffs to remain headwinds to margins.

3) Progress with robotaxis and FSD

We believe investors will be looking for data on the performance of Tesla's robotaxi service in Austin, and what it would take to expand (both within Austin and to other locations). As we discussed previously, most of the rider reactions from the early access individuals Tesla invited were positive, though there have been some instances of errors for the robotaxis based on media reports and videos posted by riders on X which has led to NHTSA requesting information from Tesla regarding these incidents (such as a car driving in the turn lane intended for cars going the other direction) per media reports. In our view, the way that Tesla has implemented the roll-out in Austin (e.g. with a local version of the software, geofencing, and a safety observer), coupled with the early performance challenges, suggests the ramp in the near-term will be slow, although we see a bigger market opportunity in the long-term for AVs.

We also think investors will look to understand progress with FSD for personal vehicles, and when FSD can be eyes-off for consumers. We continue to expect Tesla to limit unsupervised FSD for consumers at least in a wide domain for some time given the manner in which the company is implementing robotaxis and based on FSD performance data. However, we believe Tesla could allow for situational eyes-off operation in select situations (e.g. on highways in good weather) in the next few years, and we think this could help to improve FSD monetization.

4) Growth in other segments, including Services and Energy

Tesla deployed 9.6 GWh of energy storage products in 2Q25 vs 2Q24 at 9.4 GWh and 1Q25 at 10.4 GWh. Recall Tesla has previously noted that given the large-scale nature of some projects, deployments by quarter could be lumpy. We continue to assume Tesla's Energy deployment growth will be more measured, and its margin could be pressured, by tariffs on LFP batteries that in the past were sourced from China. Tesla announced in June on X that its LFP factory in the U.S. is nearly ready to begin production.

5) Progress with Optimus and expectations on ramp timing

Recall on the 1Q call Tesla had commented that it remained on track for Optimus builds on its Fremont pilot production line in 2025. Additionally, management commented that it expected to have thousands of Optimus robots working in Tesla factories and doing useful work by the end of this year and to build a total of 10K robots in 2025. However, the head of Tesla's Optimus business, Milan Kovac, recently departed (as discussed in media reports). A media report also suggested that Tesla has currently paused Optimus production.

The analysts provided color on price targets and estimates on the stock:

We raise our 2025 EPS estimate including SBC to $1.15 from $1.10 reflecting the better 2Q auto results, and maintain our 2026/2027 EPS estimates of $2.05/$3.00. Our CY25/26/27 non-GAAP EPS estimates (ex. SBC) are now $1.60/$2.50/$3.45.

We raise our 12-month price target to $315 from $285, which is based on 120X (unchanged) applied to our updated Q5-Q8E EPS estimate including SBC.

We remain Neutral rated on the stock. While we expect Tesla will face difficult fundamental conditions for its auto business over the near to medium term, we expect Tesla's earnings growth to improve over the longer-term due in part to increased profits from FSD/robotaxis (although we have a more balanced view of Tesla's monetization potential than we believe the company is targeting), and due in part to new product launches.

Key downside risks to our view relate to potentially larger vehicle price reductions than we expect, increased competition in EVs, a larger than expected tariff impact, slower EV demand, delays with products/capabilities like FSD/4680, key person risk, the internal control environment, margins, and operational risks associated with Tesla's high degree of vertical integration. Upside risks include faster EV adoption and/or share gain by Tesla, a stronger macroeconomic environment for new vehicle sales more generally, earlier new product launches than we expect, an earlier/larger impact from AI enabled products (e.g., FSD, Optimus and robotaxis), and a smaller than expected tariff impact than we currently anticipate.

Next was Rivian, the analysts noted a sharp fall in 2Q25 deliveries...

Rivian reported 2Q25 deliveries of 10,661 (up 23% qoq and down 23% yoy), which was about in line with Visible Alpha consensus of 10.7K and slightly below GSe at 11.0K. The company produced 5,979 vehicles (down 59% qoq and down 38% yoy).

The company commented that production was limited during 2Q in preparation for the model year 2026 vehicle launches that it expects later in July. Additionally, per the release, Rivian reaffirmed its 2025 delivery guidance of 40-46K. Separately, the company commented that it received a $1 bn equity investment from VW at the end of the quarter following its second quarter of gross profit in 1Q25 (in line with its previous commentary).

We modestly adjust our 2025 delivery estimate to 42.5K from 43K, and maintain our 2026/2027 estimates of 55K/92K. Our 2025/26/27 EPS estimates including SBC are unchanged at -$3.00/-$3.10/-$2.75. Our EPS estimates excluding SBC remain -$2.35/-$2.40/-$2.00.

We maintain our Neutral rating on the stock. Our 12-month price target remains $14, and is still based on 2.5X EV/Q5-Q8 revenue. Key upside/downside risks to our view relate to EV adoption, volumes, margins (including the ability to grow in software & digital services), Rivian's high degree of vertical integration, cash burn, and the supply chain.

The weak EV market may also be partly driven by elevated borrowing costs for auto loans. The good news: interest rate cuts could begin as early as September. At the same time, President Trump's proposed tax and spending package would eliminate federal EV tax credits for purchases or leases made after September 30. That sets the stage for a potential final leg of the EV price war—one that may leave only the strongest players standing. At this point, Tesla appears to be alpha.

Tyler Durden Thu, 07/03/2025 - 10:50

Blowout June Payrolls: 147K Jobs Added, Smashing Expectations; Unemployment Rate Drops To 4.1%

After yesterday's shockingly bad ADP print of negative 33K, the market was braced for the worse, with the whisper number for today's payrolls sliding to 96K, the first sub 100K print and far below the consensus of 106K, and many even contemplating how to trade a stagflationary recession print. In the end, it turned out to be just another headfake by ADP which now has the same credibility as UMich, because moments ago the BLS published a blowout job report: in June, the US added 147K payrolls, blowing away the median estimate of 106K, and higher than the upward revised May print of 144K.

There was just one economist who predicted a higher number among the 79 polled by Bloomberg who expected a higher print: that was Derek Holt at Scotiabank with 160K. Everyone else was below 147K.

Remarkably, and in a dramatic change from the Biden tradition, previous months were revised higher: April was revised up by 11,000, from +147,000 to +158,000, and the change for May was revised up by 5,000, from +139,000 to +144,000.

It wasn't just the headline print that surprised to the upside: perhaps an even bigger surprise was the unemployment rate which dropped from 4.2% to 4.1%, denying expectations of an increase to 4.3%, and far below the Fed's recently upward revised estimate of a 4.5%.

Among the major worker groups, the unemployment rate for Blacks (6.8 percent) jumped in June to the highest in 4 years, while the rates for adult women (3.6 percent) and Whites (3.6 percent) decreased. The jobless rates for adult men (3.9 percent), teenagers (14.4 percent), Asians (3.5 percent), and Hispanics (4.8 percent) showed little or no change over the month. 

The drop in the unemp rate was the result of a 93K increase in employed workers, offset by a decline in the civilian labor force to 173,380K from 170,510K and a drop in the number of unemployed workers from 7,237K to 7,1025K.

The labor force participation rate changed little at 62.3%in June, lowest in two years, and the employment-population ratio held at 59.7 percent. 

There was more good news for the inflation-panicking Fed: average hourly earnings rose just 0.2% MoM, below the 0.3% expected, and down from 0.4%, while the annual earnings growth was 3.7%, down from a downward revised 3.8%, and below the 3.8% estimate.

Elsewhere, the average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.2 hours in June. In manufacturing, the average workweek held at 40.1 hours, and overtime was unchanged at 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.2 hour to 33.5 hours in June. 

Some more details from the report:

• In June, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 190,000 to 1.6 million, largely offsetting a decrease in the prior month. The long-term unemployed accounted for 23.3 percent of all unemployed people. 
• The number of people employed part time for economic reasons, at 4.5 million, changed little in June. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs. 
• The number of people not in the labor force who currently want a job was essentially unchanged at 6.0 million in June.
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force increased by 234,000 in June to 1.8 million. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey.
• The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, increased by 256,000 in June to 637,000.

Taking a closer look at the job breakdown we find that in June, job gains occurred in state government and health care. Federal government continued to lose jobs. 

• Government employment rose by 73,000 in June. Employment in state government increased by 47,000, largely in education (+40,000). Employment in local government education continued to trend up (+23,000). Job losses continued in federal government (-7,000), where employment is down by 69,000 since reaching a recent peak in January.
• Health care added 39,000 jobs in June, similar to the average monthly gain of 43,000 over the prior 12 months. In June, job gains occurred in hospitals (+16,000) and in nursing and residential care facilities (+14,000).
• In June, social assistance employment continued to trend up (+19,000), reflecting continued growth in individual and family services (+16,000).

Of the above, the continued drop in Federal jobs was by far the best news.

Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality; and other services.

But wait there's more: whereas in the past the BLS was known to pad the top line number thanks to part-time jobs at the expense of part-time, that was not the case this time as Full-time workers rose by 282K, while part-time workers tumbled by 367K.

Last but not least, and perhaps most important, the number of native-born workers surged by 830K to a record 132.653 million, while foreign-born workers tumbled by 348K to 31.231 million, the lowest this year.

Overall, this was a stellar jobs report - at least relative to expectations - and one which has not only sent yields and the dollar soaring (with traders wrongfooted by the politically-motivated ADP once again), but odds of a July rate cut pretty much gone and odds of later rate cuts in 2025 also sliding rapidly.

Oh, and finally, never listen to ADP ever again: with a near-record spread of 180K between the two series (-33K for ADP, +147K for NFP), the ADP Private Payrolls report has as much credibility as the marxist cesspool that is the UMich consumer confidence survey.

Tyler Durden Thu, 07/03/2025 - 10:48

"June Looks Strong": Boeing Monthly Aircraft Delivery Tracker Signals Recovery

Goldman analysts led by Noah Poponak maintain a "Buy" rating on Boeing, citing new Planespotters data that suggests the embattled planemaker may finally be emerging from its manufacturing slump. A series of mid-air incidents and quality control issues had previously forced 737 Max production caps, but June's stronger delivery figures point to a potential turnaround.

Poponak told clients that Planespotters' aircraft delivery tracker for Boeing planes is trending around 58 deliveries for June (57 excluding 1 KC-46A delivery), including 42 737 MAX and 9 787.

"Of the 42 MAX deliveries, we estimate 37 were new production, with 5 from inventory. 58 deliveries is a step function improvement over the mid-40 delivery rate BA has been holding for the last 5 months," the analyst said. 

Poponak noted the uptick in deliveries, calling June "strong" and "another month of progress," as well as the highest in quite some time, adding that it "indicates to us that product quality improvements are holding, enabling higher production rates, and therefore allowing for more deliveries."

"We think BA will stabilize MAX production at ~38/month over the next several months, request a move to 42/month late in 2025, and raise production in increments of 5/month thereafter," he said. 

Here's a breakdown of Boeing's June deliveries by aircraft variant.

Poponak is Buy rated on the stock with a 12-month price target of $226. He said this is derived from targeting a 3.8% free cash flow yield on 2026E free cash. 

Boeing shares are consolidating, a sign that direction could, at some point, be coming. 

Related:

• Goldman Flags Must-Own Defense Stocks Amid Pentagon's Shifting Priorities

Spoiler alert: Boeing is not on the 'must-own' defense stocks... 

Tyler Durden Thu, 07/03/2025 - 09:20

The headline jobs number in the June employment report was above expectations and April and May payrolls were revised up by 16,000 combined.     The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
NOTE: State and local government hiring was reported at 63.5 thousand in June (seasonally adjusted).  On a Not Seasonally Adjusted (NSA) basis, 542.4 thousand education jobs lost.  This happens every June.   However, this year fewer jobs were lost than expected resulting in the large SA gain.  It is possible this is just a timing issue and more than expected educators will be let go in July.

Earlier: June Employment Report: 147 thousand Jobs, 4.1% Unemployment Rate
Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in June to 83.5% from 83.4% in May.
The 25 to 54 employment population ratio increased to 80.7% from 80.5% the previous month.
Both are down slightly from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  
There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.7% YoY in June.   
Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 4.5 million, changed little in June. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in June to 4.47 million from 4.62 million in May.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.7% from 7.8% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.65 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.46 million the previous month.
This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through June 2025, the employment report indicated positive job growth for 54 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).  
Headline Jobs, Top 10 Streaks Year EndedStreak, Months 12020113 2Current, N/A541 3199048 4200746 5197945 6 tie194333 6 tie198633 6 tie200033 9196729 10199525 1Currrent Streak
Summary:

The headline jobs number in the May employment report was above expectations and April and May payrolls were revised up by 16,000 combined.   The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
This was a solid employment report; however, a surprising number of state and local education employees were hired in June (63.5 thousand).  

My Wray Or The Highway: New Report Raises Troubling Questions Over The FBI Spiking Report Contradicting Director

Authored by Jonathan Turley,

Newly declassified FBI documents obtained by Fox raise troubling questions over the FBI allegedly spiking findings that contradicted the testimony of  then-FBI Director Christopher Wray.

The FBI had uncovered a Chinese conspiracy to influence the election in favor of then-President Joe Biden, including the creation of false driver’s licenses.

Wray denied that such efforts were occurring and the FBI reportedly proceeded to effectively bury the report.

Agents had found that the Chinese manufactured fake driver’s licenses and shipped them to the U.S. in a scheme to help Biden. That not only contradicted the narrative of the election, but Wray’s testimony.

Wray testified before Congress that the FBI had not seen any coordinated voter fraud ahead of the 2020 election:

“We have not seen historically any kind of coordinated national voter fraud effort in a major election, whether it is by mail or otherwise.”

However, that does not appear to be true.

The FBI “recalled” the reporting after his testimony “in order to re-interview the source.” It also directed “recipients” of the original report to “destroy all copies of the original report and remove the original report from all computer holdings.”

In a letter to Sen. Chuck Grassley (R, Iowa), Assistant FBI Director Marshall Yates stated that “Although the source was reengaged and provided additional context to support the initial IIR, FBI Headquarters maintained its position not to republish the report.”

Of course, there is little interest in most of the media on this foreign interference story despite the allegations of a cover up before the election.

Critics are alleging a cover up with FBI agents effectively told that it is my Wray or the highway when it came to Chinese interference with the election.

Tyler Durden Thu, 07/03/2025 - 09:00

 

 

“We fear the awesome predatory perfection of the great white shark, and have made the Discovery Channel’s “Shark Week,” “the longest-running cable television programming event in history.”

This seems somewhat disproportionate, given that 10 people a year die from shark attacks — out of more than 7 billion people. If you want to fear a living creature, than logic suggests it’s the mosquito — they kill more human beings than any other animal on the planet. Man, be it through wars or murder or wanton disregard or simple benign neglect, comes in a distant second.”

–Bloomberg, October 22, 2014

 

It is inescapable: Heading into the July 4th weekend, local media are filled with accounts of shark sightings. It’s SOP this time of year, but then add in the 50th anniversary of the movie Jaws, and it’s even worse than usual. It’s true on Long Island, and it’s likely the case up and down the East Coast. It is simply a function of living near an ocean and having a media landscape that is desperate for eyeballs and clicks.

Yes, there are fish in the ocean. Mammals, too. We see sharks and dolphins and all manner of sea-based wild life.

I burn a few chapters in “How Not to Invest” explaining why the focus on sharks a manifestation of two specific psychological issues. The first is simply emotional: Sharks are big and scary; the thought of being eaten alive is terrifying.

Secondly, shark attacks – like terrorism and market crashes – are rare events that are often discussed out of context. These are very low-probability occurrences compared to daily human experiences; we frequently lack a proper frame of reference for understanding just how unlikely these events are.

In 2024, there were 28 “unprovoked” shark attacks in the United States — and one fatality. (Globally, there were 47  shark bites)

More people died driving to the beach than were done in by sharks.

The nearby chart, via Gates Notes, reveals just how misplaced our fears are. Regardless, you should plan to enjoy the long holiday weekend, with minimal worry about the ocean’s predatory perfection…

 

 

 

See also:
Why fear is an investor’s worst enemy (Morningstar, Sep 25, 2017)

How NOT To Invest: Views From The Escarpment (Escarpment Advisory, April 29, 2025)

 

Previously:
What Kills You and Your Investments (May 21, 2014)

You Are Worrying About the Wrong Things (October 22, 2014)

Crashes & Terrorists & Sharks – Oh, My! (November 9, 2015)

Shark vs. Mosquito Deaths (April 26, 2018)

Shark Attacks Illustrate an Investing Problem (January 28, 2019)

Denominator Blindness, Shark Attack edition (February 5, 2019)

Your Chances of Dying (July 25, 2019)

 

 

 

 

 

 

 

For more information about “How Not to Invest” and where to buy hardcovers, e-books, and audio versions, please see this.

 

 

The post Beware! Shark Week! appeared first on The Big Picture.

'Deep TriState' Layoffs Leave Continuing Jobless Claims 'Stuck' At Highest Since 2021

While payrolls data dominates the news on the labor market, the higher frequency (and perhaps less 'sanitized') jobless claims data remains noteworthy.

Initial claims dropped from 237k to 233k last week, rolling over from 9 month highs...

Source: Bloomberg

Continuing jobless claims were flat at 1.964mm Americans - the highest since Nov 2021...

Source: Bloomberg

The 'Deep TriState' dominated the rise in continuing claims, moving to its highest since Dec 2021

Source: Bloomberg

At the very least, Musk should be proud of this trend.

Tyler Durden Thu, 07/03/2025 - 08:42

From the BLS: Employment Situation

Total nonfarm payroll employment increased by 147,000 in June, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in state government and health care. Federal government continued to lose jobs.
...
The change in total nonfarm payroll employment for April was revised up by 11,000, from +147,000 to +158,000, and the change for May was revised up by 5,000, from +139,000 to +144,000. With these revisions, employment in April and May combined is 16,000 higher than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 147 thousand in June.  Private payrolls increased by 74 thousand, and public payrolls increased 73 thousand (Federal payrolls decreased 7 thousand).

Payrolls for April and May were revised up by 16 thousand, combined.
The second graph shows the year-over-year change in total non-farm employment since 1968.

In June, the year-over-year change was 1.81 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate decreased to 62.3% in June, from 62.4% in May. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 59.7% from 59.7% in May (blue line).
I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was decreased to 4.1% in June from 4.2% in May.

This was above consensus expectations and April and May payrolls were revised up by 16,000 combined.  
I'll have more later ...

Futures Coiled At Record High Ahead Of Closely Watched Jobs Report

US equity futures are slightly higher with small caps outperforming into the payrolls report. As of 8:10am ET, S&P 500 futures are up 0.2% while Nasdaq 100 contracts were up 0.1%. The tax/budget bill appears likely to pass later this morning after a dramatic overnight session, so keep an eye on yields though any impact may be delayed until next week given the holiday. Payrolls are the key event of a trading day which finishes at 1 pm. Consensus has the print at 106K, while the whisper number is 96K and the Bloomberg Economics’ Nowcast model forecasts job gains of 119k, higher than consensus while Goldman expects a downbeat 85K number. Scenarios laid out by JPMorgan see the S&P as most likely to rise after the data, though a reading of less than 85k would lead to a 2% to 3% drop for the index. A poor number ( especially after the negative ADP jobs reading) would strengthen the case for a July rate cut and would add to pressure on Fed Chair Powell, who has repeatedly declined to say whether he will step down when his term as chair expires in May. European stocks are also little changed; Siemens is higher after saying the US has dropped its restrictions on software, used to design semis, exports to China, CDNS/SNPS are both up more than 6%. The Dollar is mixed but trading in tight ranges across G10: sterling is recovering this morning in tandem with GILT's after the UK Prime Minister Starmer confirmed Chancellor Reeves has his backing yesterday, alleviate further fiscal uncertainty. US bond yields are lower reflecting heighten downside risk to NFP today; the 10Y at 4.26%. Commodities are higher led by ags, base/precious, and oil. Besides the jobs report, we also get the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May

In premarket trading, Magnificent Seven stocks are mixed (Tesla, Meta +0.6%, Amazon +0.2%, Microsoft -0.03%, Alphabet -0.03%, Nvidia -0.06%, Apple -0.5%). 

• ASML (ASML) falls 1.6% after a Nikkei Asia report that Samsung Electronics is delaying completion of a chip factory in Texas, as it struggles to find customers for the plant’s output.
• Datadog (DDOG) gains 9.6% as the company will replace Juniper Networks in the S&P 500, effective prior to the opening of trading on July 9.
• FedEx (FDX) climbs 1.2% after being double-upgraded at BNP Paribas Exane, with the broker saying the stock is “arguably oversold,” expecting the firm’s relative operational outperformance vs. rival UPS to continue.
• Synopsys (SNPS) gains 5% and Cadence Design (CDNS) rises 5% after the US lifted export license requirements for chip design software sales in China, clearing the way for the companies to resume services in the world’s second-biggest economy.
• Xponential Fitness (XPOF) soars 20% after saying that after cooperating with an SEC probe, the regulator concluded its investigation without action.

Markets will be laser focused on the latest US employment numbers this morning including NFP and the unemployment rate, keeping in mind we have a shortened NY trading session today going into a long weekend. Consensus expects nonfarm payrolls to rise +106k today and that unemployment rate will round up to 4.3% (full preview here).  US stock trading is set to close at 1 p.m. New York time for the July 4 holiday, with bond dealing wrapping up an hour later.

Thursday’s cross-asset moves underscored cautious optimism as traders contend with areas of uncertainty ahead of the employment report that will help identify the path ahead for Federal Reserve interest rates. A weak report may boost Fed doves and support stocks near record highs, while stronger data could complicate the outlook.

“Markets might be getting ahead of themselves if we see a negative number,” said Susana Cruz, a strategist at Panmure Liberum. “Powell has been clear that any decision on rate cuts will depend on the data. But it is too early to assess that data, particularly inflation.”

Investors are also closely tracking the US fiscal situation, as House Republican leaders worked urgently to secure enough support for Trump’s massive tax and spending package, with the process moving toward a final vote. Concerns about mounting US deficits may weigh stronger on bond investors’ minds than the jobs report, said Frederique Carrier, head of investment strategy for RBC Wealth Management in the British Isles and Asia.

“It’s a structural deficit at a time of full employment,” Carrier said. “It doesn’t mean that a disaster is imminent, but it does mean that it’s something that the market at one point will deal with. There is definitely a lot of complacency.”

In Europe the Stoxx 50 is little changed. FTSE 100 outperforms peers, adding 0.5%, while FTSE MIB lags, dropping 0.3%. Consumer products, telecoms and travel are the worst performing sectors. Following yesterday's "Truss-like" crash, Gilts rebounded, outperforming peers, after PM Starmer said Reeves will stay on as chancellor “for many years to come.” The UK 30-year yield drops 11 bps, close to erasing Wednesday’s surge.  The pound is also the only G-10 currency that’s up versus the dollar this session. Here are the biggest movers Thursday:

• Siemens shares rise as much as 3% after the company said the US has lifted export license requirements for chip design software sales in China, allowing it to resume sales in the country
• Redcare Pharmacy shares rose as much as 7.8%, the most in almost three months, after the German online pharmacy reported preliminary second quarter revenue growth of 26%
• Currys shares rise as much as 9.8%, extending year-to-date gains, after results that analysts said point toward a change in emphasis toward growth
• Stolt-Nielsen shares climb as much as 6.7% after the bulk liquid transportation and logistics company delivered earnings above expectations in the second quarter, with its full-year target also running ahead of consensus, according to DNB Carnegie
• Virbac shares jumped as much as 7.4% after Oddo BHF upgraded its rating and price target for the French healthcare care group, expecting momentum to build in the second half of the year
• Grenke gains as much as 5.2%, climbing to the highest since mid-March, as Warburg says the German lease finance provider saw solid new business in the second quarter
• Pluxee rises as much as 9.4%, extending gains into a sixth day, after the employee benefit provider today maintained its targets for the full-year. The firm delivered third-quarter results that analysts view as generally in-line, or perhaps a small beat
• Novartis shares fall 1% as the Swiss pharma giant’s Cosentyx missed primary endpoint in a novel indication. As a result, Vontobel removes peak sales estimates of $150m for the drug
• Nordic Semiconductor falls as much as 4.3% after BofA Global Research cut its recommendation to underperform from buy, saying FY25/26E consensus revenue estimates are too high, given IoT/broad market weakness and low visibility
• Watches of Switzerland shares drop as much as 10%, the most in three months, after the company warned its margin could contract this year, which analysts at Shore said is disappointing following the recovery in profitability seen in FY25

Earlier in the session, A key Asian equity benchmark advanced, boosted by a rally in South Korean stocks and technology names in the region. The MSCI Asia Pacific Index rose as much as 0.4%, with Samsung Electronics, BHP Group and TSMC among the biggest contributors. South Korea’s Kospi Index closed at a near four-year high after its parliament passed an amendment to Commercial Act which aims to protect the rights of minority shareholders. Stock benchmarks also rose in Taiwan, India and Japan. Asian shares have traded sideways this week after rallying to a four-year high, as investors await the outcome of talks for various nations ahead of Donald Trump’s July 9 tariff deadline.  An index of Chinese stocks listed in Hong Kong led decliners around the region. China’s services activity slipped more than forecast in June to reach a nine-month low, a worry for the economy as higher US tariffs threaten exports. Vietnam’s key equity gauge edged lower Thursday despite the announcement of a deal with the US overnight.

In FX, USD is trading mixed and within tight ranges across the G10 complex this morning ahead of NFP where we see clearer asymmetry for the Dollar in a weaker report today. GBP is leading gains across G10, trading +20bps higher, retracing some of yesterday’s losses on headlines confirming Rachel Reeves "will stay in her role for many years". GBP vol is now coming off across the curve, but led by the front end with 1m now trading at 8.1vols, down from the highs of 8.75vols yesterday. JPY (-15bps vs USD) is underperforming this morning despite the move lower in US yields and headlines that BOJ member Takata confirmed that the bank is still looking to raise interest rates. Looking ahead towards the 8:30am NFP print, the market has priced in a 55bp gap in EUR, 50bp gap in AUD, and 60bp gap in JPY. Our trading desk see a clear market asymmetry to an NFP release sub 100k and any unemployment rate at or above a rounded 4.3%. In this scenario, we could see the market price increased odds of a Fed cut and send the Dollar to fresh lows. On the other hand, our research team notes that a stronger report should counter some of the recent Dollar weakness we’ve seen, although believe Dollar positioning is close to neutral levels, and in terms of the tariff narrative, think a stronger set of data could more easily be dismissed as a timing mismatch on the impact from tariffs

In rates, USTs are bull flattening this morning vs yesterday's 3pm level, supported by bid & recovery in UK Gilts in early London trade. PMI data and supply from Spain and France had little market impact as focus shifts on OBBB going through the house and US NFP later this morning. Overnight was busy with UK rates retracing 10bps in the long end and parting yesterday's sell off, flows on the desk were biased towards steepeners in USD rates and buying in front end spreads from RM. As mentioned above, following yesterday's "Truss-like" crash, Gilts rebounded and are outperforming peers, after PM Starmer said Reeves will stay on as chancellor “for many years to come.” The UK 30-year yield drops 11 bps, close to erasing Wednesday’s surge.

In commodities, WTI trades within Wednesday’s range, falling 0.8% near $66.90. Spot gold falls roughly $7 to trade near $3,350/oz. Spot silver gains 1.2% near $37.

Looking at today's calendar, we get the June jobs report at 8:30am New York time, where the median estimate for nonfarm payrolls increase is 106k; Bloomberg’s crowd-sourced whisper number is 97k.US economic data slate also includes weekly jobless claims and May trade balance (8:30am), June final S&P Global US services PMI (9:45am), June ISM services index and May factory orders (10am). Fed speaker slate includes Bostic at 11am, speaking on monetary policy in Frankfurt

Market Snapshot

• S&P 500 mini little changed
• Nasdaq 100 mini +0.1%
• Russell 2000 mini +0.6%
• Stoxx Europe 600 +0.2%
• DAX little changed
• CAC 40 little changed
• 10-year Treasury yield -2 basis points at 4.26%
• VIX +0.1 points at 16.71
• Bloomberg Dollar Index little changed at 1189.55
• euro little changed at $1.1791
• WTI crude -0.9% at $66.87/barrel

Top Overnight News

• House Republicans overcame a key procedural hurdle to advance Donald Trump’s tax and spending bill. The final vote may come later in the morning in Washington, with Speaker Mike Johnson confident it’ll pass shortly. BBG 
• Trump posted on Truth Social calling for Fed Chair Powell to "resign immediately" and linked an article regarding calls by Fannie Mac and Freddie Mac Chairman, Bill Pulte, who called on Congress to investigate Fed Chair Powell due to his political bias and deceptive Senate testimony, which is enough to be removed "for cause".
• The United States has lifted restrictions on exports to China for chip design software developers and ethane producers, a further sign of de-escalating U.S.-Sino trade tensions including concessions from Beijing over rare earths. Siemens said it restored full access for Chinese customers, while Synopsys and Cadence said they’re in the process. RTRS, BBG 
• A private gauge of China’s services sector activity expanded in June, but at a softer pace despite efforts by businesses to attract new customers. China’s Caixin services PMI for June came in below expectations at 50.6 (down from 51.1 in May and under the consensus estimate of 50.9). WSJ 
• The BOJ should be ready to resume policy tightening if U.S. trade talks progress, policy board member Hajime Takata said, confirming that the bank is still looking to raise interest rates. WSJ 
• Japan’s 30-year bond auction saw strong demand, with a bid-to-cover ratio of 3.58, the highest since February. BBG 
• June Nonfarm payrolls are expected to rise by 106k in June, down from May's 139K and below the three-month average of +135k.
• U.S. and India trade negotiators were pushing on Wednesday to try to land a tariff-reducing deal ahead of President Donald Trump's July 9 negotiating deadline, but disagreements over U.S. dairy and agriculture remained unresolved, sources familiar with the talks said. BBG
• The Treasury is likely to meet its increased borrowing needs w/short-term bills rather than notes or bonds in an effort to remove upward pressure on yields at the long-end of the curve. BBG 
• Trump said Jerome Powell should resign “immediately” after FHFA head Bill Pulte urged Congress to investigate the Fed chair, alleging his Senate testimony about the central bank’s planned renovations was “deceptive.” BBG 

Reconciliation Bill

• US House Republicans have now opened the way for final bill vote; rule vote passes with 219-213.
• The Democrat leader in the House began his Magic Minute at around 10:00BST/05:00ET; expected to last for one hour. After this, speaker Johnson will take the floor and then the final vote can begin.

Trade/Tariffs

• Siemens (SIE GY) said the US rescinded curbs for the Co. related to chip design software sales to China, according to Bloomberg. Siemens later confirmed it has resumed sales and support to Chinese customers after it was recently notified by the US Commerce Department that export control restrictions on EDA software and technology to customers in China are no longer in place.
• South Korea's President Lee said he cannot say if they can conclude US tariff talks by July 8th and the two sides are not really clear on what they want concerning tariff talks, while he added that US tariff negotiations are looking very difficult.
• Senior CCP official on US-China relations, says setting up barriers and thresholds will eventually harm both, says the US should recognise how much it has to gain from US-China cooperation.
• Vietnamese Foreign Minister says US and Vietnamese negotiating teams are coordinating to finalise the trade deal. Agreement creates expectation and hope for businesses. To continue boost exports and expand ties with other countries

A more detailed look at global markets courtesy of Newsquawk

APAC stocks failed to sustain the mostly constructive handover from Wall St counterparts with sentiment in the region cautious as participants braced for the key US jobs data and digested Chinese Caixin Services and Composite PMIs. ASX 200 marginally declined amid weakness in telecoms, financials and the consumer sectors, while trade data showed a monthly contraction in Australian exports. Nikkei 225 lacked conviction in the absence of tier-1 data from Japan and following mixed rhetoric from BoJ's Takata, while US-Japan trade uncertainty lingered and trade negotiator Akazawa recently reiterated that an agreement which would hurt Japan's national interests for the sake of timing should not be made. Hang Seng and Shanghai Comp were ultimately mixed following Chinese PMI data in which Caixin Services PMI missed expectations but Caixin Composite PMI accelerated and returned to expansionary territory.

Top Asian News

• BoJ's Takata said the price stability target is close to being achieved and careful monitoring continues to be warranted, while he added that the BoJ should continue to further adjust the degree of monetary accommodation if it can confirm the positive corporate behaviour is being maintained. Takata also commented that given uncertainties regarding various US policies remain high, the BoJ should conduct monetary policy in a more flexible manner without being too pessimistic and to maintain momentum toward hitting its price target, the BoJ also needs to maintain its current accommodative monetary policy stance. Furthermore, his view is that the BoJ needs to support economic activity for the time being by maintaining its current accommodative monetary policy stance but at the same time, he believes the BoJ should gradually and cautiously shift gears in its monetary policy.
• PBoC has asked European financial institutions for advice on dealing with the effects of low interest rates, according to the FT.
• European Commission VP Kallas and Chinese Foreign Minister Wang reaffirmed EU's commitment to engage constructively with China to address global challenges, while Kallas called on China to end distortive practices, including restrictions on rare earth exports, which pose significant risks to European companies and endanger the reliability of global supply chains. Kallas also highlighted the serious threat Chinese companies' support for Russia's war poses to European security.
• Japan Trade Union Rengo says final data shows avg. wage hike of 5.25% for fiscal 2025 (prev. 5.10% hike in 2024).

European bourses began the session with gains into a packed afternoon agenda; however, as session has progressed this strength has waned a touch and the picture is now more mixed. Euro Stoxx 50 -0.2%; FTSE 100 +0.3% outperforms after the pressure seen on Wednesday. Sectors primarily in the green at first, though as above the picture has turned to more of a mixed one. Retail outperforms led by the initial readthrough of US-Vietnam updates, though the higher-than-expected tariff levy has caused this to fade. Real Estate also strong given UK yields.

Top European News

• UK PM Starmer said Rachel Reeves will be the Chancellor for years to come and will be the Chancellor at the next election.
• ECB officials question whether the euro has strengthened too much as policymakers at the central bank fret that a surging currency increases the risk of inflation undershooting, according to FT

FX

• DXY is broadly flat intraday in typical pre-NFP trade. DXY just firmer in a 96.686 to 96.879 band, within yesterday's 96.62-97.16 parameter. ING does not believe that the FX market has reached "peak bearishness" on the USD, despite widespread negative sentiment and forecasts
• G10s are contained, but generally softer, vs the USD. Antipodeans have at points been at the bottom of the pile, with the AUD hit by primarily weaker Australian trade data overnight and potentially focus on the US-Vietnam deal.
• EUR contained on either side of 1.1800 throughout the morning. Since, has come under some modest pressure and slipping towards lows of 1.1787, clear of yesterday's 1.1746 base. Specifics light thus far, no move to Final PMIs. Awaiting US events.
• JPY and CHF mixed. USD/JPY lacked conviction overnight amid the flimsy risk appetite in the region, little move to a Rengo update for FY25; JPY under slight pressure but shy of 144.00. CHF a touch firmer after domestic inflation came in above market consensus, but roughly in-line with the SNB's quarterly view.
• Sterling outperforms, bouncing as markets in the UK welcome PM Starmer backing Chancellor Reeves after the sell off seen after PMQs. GBP/USD currently resides in a 1.3624-1.3675 range, well within yesterday's 1.3560-1.3752 parameter.
• PBoC set USD/CNY mid-point at 7.1523 vs exp. 7.1618 (Prev. 7.1546).

Fixed Income

• Gilts bounce as Starmer supports Reeves in extensive media rounds. Benchmark gapped higher by 23 ticks before extending further to a 92.74 peak. However, this still leaves it shy of Wednesday’s 93.41 peak and the WTD high above at 93.76. Amidst these moves, focus on yields as they recover from yesterday’s spike; 10yr down to 4.51% vs a 4.68% peak on Wednesday, 30yr to 5.30% vs 5.45%.
• USTs firmer, but only modestly so, into a frontloaded US agenda headlined by NFP (exp. 110k, prev. 139k). Thus far, the focus has been on the Reconciliation Bill; Rule vote passed, full vote expected in the next few hours, at this stage it should pass without too much issue. USTs in a slim sub-10 tick band, entirely within yesterday's slightly more expansive 111-16+ to 111-30+ parameter.
• Bunds bid and firmer by just over 30 ticks at best. Picked up gradually throughout the European morning with newsflow light aside from modest revisions to Final PMIs, no reaction to the prints. Supply well received, but again no reaction. Awaiting direction from the above US events.
• Spain sells EUR 6.049bln vs exp. EUR 5.0-6.0bln 2.40% 2028, 3.15% 2035, 3.50% 2041 Bono & EUR 0.735bln vs exp. EUR 0.25-0.75bln 1.15% 2036 I/L
• France sells EUR 11.95bln vs exp. EUR 10-12bln 3.20% 2035, 3.60% 2042 & 3.75% 2056 OAT

Commodities

• Crude benchmarks are softer, despite limited newsflow. Bearishness potentially emanating from the lack of escalations regarding Iran, although a sixth round of US-Iranian negotiations is expected to be held in Oslo next week. More broadly, focus is beginning to turn to the weekend's OPEC+ meeting, where a production increase is expected.
• WTI resides in a USD 66.65-67.50/bbl range while its Brent counterpart trades in a USD 68.32-69.00/bbl range.
• Precious metals generally firmer into data. XAU has pulled back from WTD bests, but remains bid overall. As high as USD 3365/oz, vs USD 3329/oz from June 23rd.
• Base metals mixed, given the cautious typical pre-NFP tone. 3M LME Copper topped USD 10k/t and has been trading on either side of the level since.
• UAE's ADNOC restores most Murban crude oil supply for equity holders in July after earlier cuts.

US Event calendar

• 8:30 am: Jun Change in Nonfarm Payrolls, est. 106k, prior 139k
• 8:30 am: Jun Change in Private Payrolls, est. 100k, prior 140k
• 8:30 am: Jun Change in Manufact. Payrolls, est. -2k, prior -8k
• 8:30 am: Jun Unemployment Rate, est. 4.3%, prior 4.2%
• 8:30 am: Jun Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
• 8:30 am: Jun Average Hourly Earnings YoY, est. 3.8%, prior 3.9%
• 8:30 am: Jun 28 Initial Jobless Claims, est. 240.5k, prior 236k
• 8:30 am: May Trade Balance, est. -71b, prior -61.62b
• 8:30 am: Jun 21 Continuing Claims, est. 1962k, prior 1974k
• 9:45 am: Jun F S&P Global U.S. Services PMI, est. 53.1, prior 53.1
• 9:45 am: Jun F S&P Global U.S. Composite PMI, est. 52.8, prior 52.8
• 10:00 am: Jun ISM Services Index, est. 50.6, prior 49.9
• 10:00 am: May Factory Orders, est. 8.15%, prior -3.7%
• 10:00 am: May F Durable Goods Orders, est. 16.4%, prior 16.4%
• 10:00 am: May F Durables Ex Transportation, est. 0.5%, prior 0.5%
• 10:00 am: May F Cap Goods Orders Nondef Ex Air, est. 1.65%, prior 1.7%
• 10:00 am: May F Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.5%

DB's Jim Reid concludes the overnight wrap

It’s been an eventful 24 hours in markets, with a bunch of competing narratives across different asset classes. On the bright side, the S&P 500 (+0.47%) hit a new record after the US reached a trade deal with Vietnam, which raised hopes they were about to announce multiple deals before the reciprocal tariff deadline on July 9. But in the latest twist of 2025, the UK became the centre of market attention again as investors zeroed in on their public finances again. So 10yr gilt yields (+15.8bps) saw their biggest daily jump since the Liberation Day turmoil in April, alongside a cross-asset slump that dragged down UK equities and the pound sterling as well.

In terms of those UK developments, the market nerves had already begun the previous day, as the government made a significant U-turn over cuts to welfare spending, which raised doubts about fiscal discipline. That was coming at a sensitive time, because they’d just made another U-turn last month over winter fuel payments. 

That selloff gathered pace yesterday thanks to growing question marks around whether Chancellor of the Exchequer Rachel Reeves would remain in post. For markets, the logic is that Reeves has been a big defender of the fiscal rules, and there’ve been growing calls for these rules to be eased and for borrowing to go up. So the concern in bond markets is that a new Chancellor might trigger a fresh wave of borrowing that pushes rates up further. Earlier, Prime Minister Starmer refused to confirm whether Chancellor Reeves would stay in post, but much later he said to the BBC that she would remain chancellor "for many years to come" which seems to take away some of the short term pressure.

Looking forward, the immediate issue is that the government left a very narrow margin in March against their fiscal rules they set themselves. And since then, that margin has disappeared thanks to factors like the spending U-turns and the tariff announcements after Liberation Day. So unless we got a big burst of growth before the Budget, then the government would need to announce further tax rises or spending cuts if they still want to meet the fiscal rules. So this leaves them in a tricky position. On tax, they’ve ruled out raising several large taxes like income tax and VAT, and the tax rises already announced generated unpopularity. On spending, they’ve come under intense pressure in response to the spending reductions so far, which have resulted in U-turns. And if they eased the fiscal rules, the fear would be a fresh market selloff like yesterday. So it’s not obvious which way they turn. Our UK economist thinks tax hikes will bear the brunt of the heavy lifting on any fiscal consolidation, but given the controversy they generated back in the Autumn budget, it’s clearly a difficult situation.

This backdrop led to a heavy selloff among UK assets yesterday. Gilts were at the epicentre, with the 10yr yield (+15.8bps) up to 4.61%. That selloff was particularly clear at the long-end of the curve, and the 30yr yield (+19.1bps) saw an even bigger rise to 5.42%. Interestingly, the pound sterling slumped as well, which isn’t what normally happens when longer-term interest rates are rising, as that should make the currency more attractive, other things equal. So that was reminiscent of the market patterns seen after Liz Truss, and the pound fell -0.80% against the US Dollar, making it the worst-performing G10 currency yesterday. That spread to UK equities too, with the FTSE 100 (-0.12%) being the only major European index to lose ground. And notably, the FTSE 250, which is a more domestically-focused index, fell by -1.34%, which was its biggest daily decline since the Liberation Day turmoil in early April.

Whilst the UK was dominating attention, it wasn’t all bad news yesterday, and the S&P 500 (+0.47%) climbed to a new record as hopes mounted about potential trade deals. The main catalyst was Trump’s announcement of a deal with Vietnam, which he said would see them pay a 20% tariff on goods exported to the US, whilst the US would pay a zero tariff on their own exports. So that raised hopes about further announcements before the July 9 reciprocal tariff deadline next week. And some of the more trade-sensitive sectors did particularly well, with the Philadelphia Semiconductor index up +1.88% on the day and the S&P 500 Autos subsector was up +4.64%.

Looking forward, attention will remain on the US today, as the jobs report for June is coming out later on. This month it’s on a Thursday because of the Independence Day holiday tomorrow, and our US economists at DB expect nonfarm payrolls to come in at +100k. That’s a bit slower than recent months, with the 3-month average currently at +135k, but they point to higher initial jobless claims in the survey week, and a pattern of subdued summer payroll gains over the last couple of years. In turn, they think the unemployment rate will rise to 4.3%, although the risk is that it could round down.

Ahead of that reading, there was some nervousness about the US labour market yesterday, as the ADP’s report of private payrolls contracted by -33k in June (vs. +98k expected). That was the first negative print since March 2023, and it’s the 3rd month in a row that the ADP print has slowed, so it added to fears that the economy might be starting to show the signs of a slowdown after Liberation Day. Indeed, futures moved to price in marginally more rate cuts this year, with the amount expected by the December meeting up +0.5bps on the day to 65bps. But long-end Treasuries were more influenced by the global bond selloff and fiscal fears, with a decent steepening that took the 10yr yield (+3.5bps) up to 4.277%. They've rallied back around -1.2bps overnight.

While the White House continued to make progress on trade deals, President Trump’s tax bill seemed to hit a snag. House Republicans delayed a vote on Wednesday as some of the more fiscally conservative members took issue with the amount of spending the Senate’s amendments added to the bill. Speaker Johnson can only lose three votes on a bill that only passed 215-214 last month. President Trump’s self-imposed July 4th deadline would be in trouble if the House were to make significant changes that could cause the bill to be sent back to the Senate.

Elsewhere in Europe, the mood was a lot more positive outside the UK. In part, that came about thanks to optimism about the Vietnam trade deal, raising hopes that something might also be agreed between the EU and the US. So most indices put in a decent performance, including the DAX (+0.49%) and the CAC 40 (+0.99%), although the Europe-wide STOXX 600 (+0.18%) was dragged down by the UK’s weakness. Meanwhile for bond markets, the UK selloff didn’t help elsewhere, with yields on 10yr OATs (+7.0bps) and BTPs (+6.5bps) both rising. And for 10yr bunds there was a change in the specific bond used with a new 10yr auction, but the generic 10yr yield was up +9.0bps.

In Asia, markets are mixed. The Hang Seng is -0.96%, around its largest drop in two weeks, while the S&P/ASX 200 is also slightly lower at -0.13%. Meanwhile, the Nikkei is flat but the KOSPI (+0.95%) and the CSI (+0.47%) are up alongside US equity futures which are up around a tenth of a percent.

Early morning data indicated that the Chinese services sector expanded less than anticipated in June, as weak domestic and overseas demand significantly impacted new business activity. The Caixin services PMI fell to a 9-month low of 50.6 in June, below the expected 50.9 and down from the 51.1 recorded the previous month. This disappointing services PMI contrasts with the relatively positive manufacturing data released earlier in the week. Although official PMIs indicated a slowdown in manufacturing, the Caixin PMI data released yesterday suggested a rapid return to growth in the manufacturing sector.

In other news, Australia’s trade surplus sharply decreased to A$2.24 billion in May, compared to A$5.0 billion, marking its lowest level since November 2019, as weak global demand has adversely affected exports. This decline was primarily driven by a -2.7% month-on-month decrease in exports.

To the day ahead now, and US data releases include the jobs report for June, the ISM services index for June, the weekly initial jobless claims, as well as the trade balance and factory orders for May. Otherwise we’ll get the final services and composite PMIs for June in the US and Europe. From central banks, we’ll hear from the Fed’s Bostic, and the ECB will publish the account of their June meeting

Tyler Durden Thu, 07/03/2025 - 08:21